Sion Jenkins is preparing to sue the Home Office for compensation worth hundreds of thousands of pounds after he was cleared of murdering his foster daughter Billie-Jo.

Lawyers acting for Jenkins, 48, aim to file a 'miscarriage of justice' lawsuit against the government that will seek to recoup his lost earnings after he was initially jailed for murdering the 13-year-old. Sources claim he could be entitled to as much as £300,000.

The moves are likely to infuriate both Billie-Jo's natural parents and the family of his millionairess second wife, who called Jenkins 'a gold digger' after an Old Bailey jury could not decide whether he had killed the teenager at their home in Hastings, East Sussex.

The news of Jenkins's plans to sue came as his ex-wife told a Sunday newspaper that he had beaten both her and their children. A memoir by Lois Jenkins published by the Mail on Sunday alleged that her former husband had a history of domestic violence and a fascination for corporal punishment. He was allegedly devoted to an American religious book on disciplining children, Spare Not the Rod, which advocated beating those who misbehaved.

Recalling the day of Billy-Jo's death in February 1997, Mrs Jenkins writes: 'Sion seemed strangely cold and distant. His eyes were as grey as slate with pinpoint pupils... He offered no comfort. I felt let down and faintly embarrassed. I wondered if our friends had noticed his detachment. I can recall with clarity the look in his eyes as he told the children, "Billie's dead". It had no trace of emotion.' After Jenkins was jailed, his wife left the country with the couple's four daughters. She now lives in Tasmania with a new partner.

As well as a potential government payout, Jenkins, who is married to an antiques dealer, Christina Ferneyhough, stands to make tens of thousands of pounds from a media bidding war to secure the first interviews with him.

The deputy head teacher, who worked in Hastings, East Sussex, was found guilty in 1998 of Billie-Jo's murder and jailed, before being freed six years later when the Court of Appeal quashed his conviction. Last Thursday he walked free after an Old Bailey jury failed to reach a verdict at his second retrial after deliberating for more than 30 hours.

It has also emerged that the Independent Police Complaints Commission will be instructed to launch an investigation into the handling of the case by Sussex Police. Sources for the IPCC indicated they are 'minded' to look into the case as Jenkins's solicitors raised further questions over the nature of the police investigation. The involvement of police investigators could yield damaging revelations about this a high-profile case.

Jenkins's lawyers allege that not only did police lose vital evidence but that the use of expert witnesses was fruitless. In particular, police investigators will be asked to scrutinise the effectiveness and purpose of the expert witnesses lined up by Sussex Police.

Neil O'May, a solicitor at Bindman & Partners, confirmed they were examining two areas of possible action. 'There is the issue of compensation from the Home Office for the lost years and which would be based on a miscarriage of justice. Then there may be civil proceedings against the police for their failure to carry out their public duties.'

Solicitors believe Jenkins, who was tried three times for the murder, has a compelling case for compensation. Although lawsuits against the Home Office over a miscarriage of justice are relatively rare, successful cases include compensation deals to the Guildford Four, who were wrongly convicted of bombing two pubs in the town.